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2015 CHANGES IN THE LAW

2015 BILLS

AB 301. Fire Prevention Fees. Allows sellers and buyers of property subject to fire prevention fees to negotiate the apportionment of those fees.

AB 349. Artificial Turf. Makes void and unenforceable any provision in an association's governing documents that prohibits artificial turf "or any other synthetic surface that resembles grass." The bill also prohibits HOAs from requiring the removal of water-efficient landscaping installed in response to the drought emergency.

AB 557. Corporate Suspension. This bill would make a nonprofit public benefit corporation and a nonprofit mutual benefit corporation subject to administrative dissolution if its corporate powers have been suspended by the Franchise Tax Board or the Secretary of State for 48 months. This could have a significant negative impact on associations since they are often not aware they have been suspended and the cost to reincorporate is greater than a simple revivor.

AB 596. Annual Budget Disclosure of FHA Status. Amends existing Civil Code §5300  beginning July 1, 2016, to require condominium developments to include in their annual budget report their status as a Federal Housing Administration (FHA)-approved condominium project and as a federal Department of Veterans Affairs (VA)-approved condominium project.

AB 661. Recording Fees. Existing law excludes certain real estate instruments from a recording fee. This bill amends the exclusion to state the fee does not apply to a real estate instrument, paper or notice accompanied by a declaration that states the transfer is subject to a documentary transfer tax, it is recorded concurrently with a transfer subject to a documentary transfer tax, or it’s submitted for recording on the same business day as and related to recording a transfer subject to a documentary transfer tax. (Gov. Code §27388.)

AB 786. Recycled Water. Allows an association to fine owners for reducing or eliminating the watering of a lawn or vegetation if recycled water is available to the owner for that purpose and the owner fails to use it. (Civ. Code §4735.)

AB 856. Drones - Invasion of Privacy. This bill expands liability for physical invasion of privacy to additionally include a person knowingly entering into the airspace above the land of another person without permission, as provided.

AB 1236. Electric Vehicle Charging Stations – Local Approval. Requires a city, county or city and county approve an application for placement of an EVCS unless a “specific, adverse impact” to the health and safety of the public would result and there is no way to mitigate it. A city or city with a population of 200,000 or more residents must adopt an “expedited and streamlined permitting process” ordinance by September 30, 2016. (Gov. Code §65850.7.)

AB 1448. Clotheslines. Allows an owner to use a clothesline or drying rack in the owner’s exclusive use backyard. A clothesline and drying rack are not a balcony, railing, awning, or any other part of a building or structure. An association may establish reasonable rules regarding the clotheslines and drying racks. However, the association can’t prohibit them or unreasonably restrict their use. (New Civ. Code §4750.10.)

AB 1516. Assessment and Reserve Funding Disclosure Form. Makes technical changes to the Assessment and Reserve Funding Disclosure Form to replace the word “funding” in two locations with the word “funded.” (Civ. Code §5570(a)(7).)

SB 142. Trespass by Drones. This bill extends liability for wrongful occupation of real property and damages to a person who operates a drone less than 350 feet above ground level within the airspace overlaying the real property, without the express permission of the person or entity with the legal authority to grant access or without legal authority.

SB 241. Electric Vehicles. This bill is specific to Orange County. It extends certain existing provisions affecting electric vehicles and imposes a state-mandated local program as well as other provisions.

SB 328. Pesticide Use. Requires a landlord or the landlord’s authorized agent to provide written notification to tenants prior to application of a pesticide if it’s not applied by a licensed pest control operator. This law may be relevant to associations because courts have applied landlord/tenant law to associations in certain circumstances such as regarding safety issues. (See Frances T. v. Village Green Owners Ass’n (1986) 42 Cal.3d 490.) (Civ. Code §1940.8.5.)

SB 351. Corporate Officers. Amends Corporations Code section 7213 to remove the word “chairman” and replace with “chair of the board” and add titles “chair, chairperson, chairman,” and “chairwoman.” (Corp. Code §7213.)

SB 655. Mold. Alleviates a landlord’s responsibility to repair damage associated with mold until the landlord receives notice or if the tenant is in violation of affirmative obligations as specified in Civil Code section 1941.2. It amends Health and Safety Code sections 17920 and 17920.3 to include visible mold growth as a substandard building condition which is a misdemeanor crime. An exemption applies for mold that is “minor and found on surfaces that can accumulate moisture as part of their properly functioning and intended use.” This proposed law may be relevant to associations because courts have applied landlord/tenant law to associations in certain circumstances such as regarding safety issues. (See Frances T. v. Village Green Owners Assn (1986) 42 Cal.3d 490.) (Civ. Code §1941.7; Health & Safety Code §§17920, 17920.3.)

SB 658. Automated External Defibrillators (AED) Exemptions. Amends existing Civil Code section 1714.21 and Health & Safety Code section 1797.196 to include that to be exempt from civil liability for rendering emergency care through an AED, a person or entity who owns an AED must comply with regulations regarding the placement, maintenance and testing of the AED. Exemption also requires a building owner to provide annual notifications to tenants with the AED’s location, provide contact information to tenants for obtaining AED or CPR training, annually offer a demonstration on the AED to at least one person affiliated with the building, and post instructions on its use. (Civ. Code §1714.21; Health & Safety Code §1797.196.)

Pool Regulations. New pool regulations went into effect affecting HOA pools since they are not considered "private" for purposes of health and safety regulations. In addition to meeting higher chlorine requirements, HOAs must now test the water daily. (Small HOAs are exempted if they have 24 or fewer units.) Regulations require that written records be kept onsite and preserved for at least two years. This includes (i) chemical testing, (ii) incidents of fecal, vomit and blood contamination, (iii) incidents of drownings or near drownings, (iv) maintenance and repairs, and (v) manufacturer’s instructions for operation of all mechanical and electrical equipment and water treatment systems. (See Pool Regulations.)

2015 CASE LAW

Ryland Mews HOA v. Munoz (2015) 234 Cal.App.4th 705. An owner installed hardwood floors in violation of the CC&Rs and created intolerable noise conditions for the owner below. When confronted, Munoz refused to mitigate the problem claiming his wife suffered severe allergies. The association sued Munoz for the following CC&R violations: (i) creating a nuisance that unreasonably interfered with the quiet enjoyment of another owner's condominium, (ii) altering his unit in a manner that increased sound transmission to an adjoining unit, and (iii) failing to get written approval from the architectural committee. The association asked the court to issue a preliminary injunction that Munoz relieve the problem pending trial on the merits. The court agreed and ordered Munoz to install rugs over 80% of his floors.

Watts v. Oak Shores Community Association (March 2015). The court upheld an association's right to impose a reasonable fee on landlords for the burden their renters place on the association. An exact correlation is not required since the statute “requires nothing more than a reasonable, good faith estimate of the amount of the fee necessary to defray the cost for which it is levied.” Finally, the court rejected the owners’ argument that the judicial deference standard (deferring to board decisions) is limited to ordinary maintenance decisions. The court wrote that “[c]ommon interest developments are best operated by the board of directors, not the courts.”

Clark v. McCann (2015 WL 9688162), the Registrar of Voters excluded ten ballots because the voters failed to include a valid residence address. Because the election was decided by two votes, voter Aurora Clark sued. When applied to HOA elections, the court’s holding confirms that homeowners must comply with statutory requirements and ratify their eligibility to vote by providing a valid separate interest address on the outer envelope.

Pflugh v. Steiner Street and Duboce Ave. Condominium HOA (Cal. Ct. App. Nov. 4, 2015). The membership voted to restate their CC&Rs and allocate part of the common area as exclusive use common area parking for two units. Some homeowners sued claiming that assignment of common area requires unanimous approval. The court disagreed and ruled that unanimous consent was not required to change common area to exclusive-use common area.

Castaic Lake Water Agency v. Newhall County Water Dist. (2015) 238 Cal.App.4th 1196. 2013. The Newhall Water District posted notice of a board meeting which included a closed session with legal counsel to discuss potential litigation. The notice erroneously cited Government Code §54956.9(c), instead of §54956.9(d)(4). The Castaic Water Agency sued to invalidate the meeting alleging Newhall violated the Brown Act. The trial court granted Newhall’s motion for dismissal. The appellate court upheld the decision because meeting notice “substantially complied” with the Brown Act and “could not possibly have misled or confused anyone.” Since the Davis-Stirling Open Meeting Act is modeled on the Brown Act, the principle in this case should apply to small notice errors by HOA boards of directors.

Tract 19051 Homeowners Assn v. Kemp (2015) 60 Cal.4th 1135. Prevailing owner can recover attorney fees under Civil Code section 5975(c) in a case brought by association against owner to enforce governing documents even though the court found the association didn’t exist. The Supreme Court held the plain reading of 5975(c) supports that the award of attorney fees is reciprocal in an action where the association brings the claim to enforce the governing documents regardless of whether the association exists. The recovery is based solely on the association’s claim to enforce the governing documents and not based on determining whether the association is a common interest development.

UNPUBLISHED OPINIONS

The following cases are unpublished opinions and are not binding precedent. However, they give insight on how future courts might deal with similar issues.

Villas in Whispering Palms v. Tempkin. Associations can reestablish restrictions where previously there had been lax enforcement. The court of appeals held that the board's enforcement of its dog restriction, despite years of granting variances, was reasonable and entitled to judicial deference. The court noted that once the board decided to strictly enforce the rule, it was done uniformly.

Bel Air Ridge HOA v. Rosenberg. Bel Air Ridge HOA had older CC&Rs that required approval by 75% of the membership to amend them. Due to voter apathy, the board had to extend the voting period multiple times to get enough owners to vote on the CC&Rs. More that 50% of the membership approved the restatement but it was less than the required 75%. It was enough, however, to petition the court for approval. Three homeowners filed papers opposing the petition. The court approved the CC&Rs and the opponents appealed. They challenged the board's repeated extension of the voting deadline. The court of appeals reviewed the issue and concluded the extensions did not violate the voting process.

Creger v. Hudson 141 Homeowners Association (February 2015). An association’s recording of a lien is prelitigation communication protected activity even though the lien itself didn’t comply with statutory requirements. The court of appeals extended the holding of Wilton v. Mountain Wood Homeowners Assn. (1993) 18 Cal.App.4th 565, 571), where the court found that a lien was protected activity even though it was fraudulent, to cover a lien that is nonfraudulent but statutorily noncompliant. The court reasoned that if fraudulent claims are protected then negligent claims are also protected. (Creger v. Hudson 141 Homeowners Association (February 5, 2015, WL 501965) [nonpub. opn.].)

Briskin v. Oceanside Marina Towers Association (March 2015). An owner claimed he was owed compensation for negotiating a land purchase for the association. The association argued the bylaws required a board resolution to compensate a director or member of a committee and a resolution did not exist. The court of appeals held that the bylaws were not the sole determining factor whether an agreement existed to compensate the owner for his services although the lack of a resolution was detrimental to his case. (Briskin v. Oceanside Marina Towers Association (March 20, 2015, WL 1307204) [nonpub. opn.].)

Rice v. Rancho Palma Grande Homeowners Association (September 2015). As the prevailing party, an association can recover attorney fees under Civil Code section 5975 regardless of whether its insurer paid the attorney fees. The court also held that a prevailing party can recover pre-litigation costs under Civil Code section 5975 because although part of the pre-litigation costs involved alternative dispute resolution (ADR), the ADR failed. The non-prevailing party unsuccessfully argued the pre-litigation costs couldn’t be recovered because of the provision in Civil Code section 5955(b) requiring both parties to pay for the ADR costs. (Rice v. Rancho Palma Grande Homeowners Association (September 1, 2015, WL 5145720) [nonpub. opn.].)

Pasternack v. Fagel (September 2015). An owner filed a claim against another owner to enforce the setback language in the association’s CC&Rs in effect when the owners purchased their properties. Subsequent to the owners’ purchase of their properties, the city adopted a resolution changing the setback requirements for the development. The court held that the owners could not be held to the setback requirements in effect when they purchased because the city’s resolution was a subsequent change deemed incorporated into the CC&Rs. The CC&Rs “are in essence a contractual supplement to state and municipal zoning laws” and the state or municipality has “the power to make and to modify zoning regulations,” which is “a matter of substantial public interest.” Unless there is “explicit language to the contrary,” the CC&Rs “incorporate and contemplate” the city’s setback requirements in place when the owners purchased their property and any “subsequent changes to those requirements.” (Pasternack v. Fagel (September 11, 2015, WL 5313478) [nonpub. opn].)

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